Report: Indian domestic IT market to grow at 15-18% in 2013

Tuesday, January 29, 2013

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Increasing adoption of technology by Indian companies is set to drive growth of the $30 billion domestic information technology (IT) market at 15-18% in 2013, according to technology advisory firm, Zinnov Consultancy.

The $30 billion domestic information technology (IT) market is estimated to grow at 15-18% in 2013 on the back of increasing adoption of technology by Indian companies, according to technology advisory firm Zinnov Management Consulting Pvt. Ltd.

More than 5,000 large enterprises and over 10 million small and medium businesses (SMBs) in the country are ready to adopt IT, Zinnov said in a report released on Monday.

Increased adoption of IT by domestic clients could help support India’s $100 billion software industry, which is battling spending cuts by clients in its two largest markets—the US and Europe. In fact, India’s top outsourcing firms such as Infosys Ltd and Wipro Ltd have downgraded their revenue projections for 2013. (Also read: Worldwide IT spending to rise 4.2% in 2013: Gartner)

Independent brokerage Credit Lyonnais Securities Asia (CLSA) cautioned in a report last week that IT budgets will remain “flattish to down” in 2013. While CLSA expected the sentiment of 2012 to continue through the initial months of 2013, researcher Gartner Inc. projected worldwide IT spending to grow at 4.2% to $3.7 trillion in 2013, mainly on account of a projected gain in the value of foreign currencies versus the dollar.

“While the IT exports market is getting a mixed feedback, the Indian domestic IT market holds significant potential as we enter 2013,” Zinnov said in a statement. (Also read: IT and ITES industry overview)

Along with government bodies, manufacturing, telecommunications, retail, financial services, banking and insurance, energy and utilities, transportation and education have the potential to drive IT adoption in India, Gartner identified.

“As companies grow in size and scale, the market is likely to see larger IT services deals with more sophisticated deal engagement practices. This market has a critical mass that is worth tapping into and has the potential to expand further with ‘as a service’-type service offerings’,” it said.

Hardware, software and service vendors will collaborate with one another as IT firms focus on providing clients end-to-end solutions to clients, Zinnov said in its report, adding that about half of the new deals signed this year will be in this format.

The research firm expects that big- and mid-sized multinational IT firms with research and development facilities in India will eye opportunities in the local market, especially from small and medium businesses. “This will also add significantly to the growth projections for most MNCs,” Zinnov said.

Big data, with the potential to affect the $1 billion market in analytics software and computational platforms and services in India, will receive a boost from both traditional adopters—such as telecommunications, manufacturing and banking, financial services and insurance sectors—as well as non-traditional sectors such as energy and transportation, the report said.

In a related observation, Zinnov said digital marketing will grow faster than other forms of advertising in the country, with more than 100 million Indians active on social media. As a result, video and social media-based digital marketing will see rapid innovation in search engine optimization, search engine marketing, and mobile marketing, among others, it said.

“India is currently at an inflection point with respect to usage of social media as a marketing and business tool and customers will derive newer and innovative use cases while using social media going forward,” Zinnov said in the report.

Technology-based start-ups will be under the spotlight in 2013 as multinational firms eye Indian start-ups for acquiring technologies and talent for both local and global markets, Zinnov said. There are currently more than 3,000 technology-focused start-ups in the country.